Immoveable property Tax

[mak1]

Hi Nigel,

I have found your website to be most helpful and informative during the process of purchasing a property in Cyprus, I do have a few questions regarding the immoveable property tax which I hope you are able to answer.
My situation is such, I purchased a property off-plan in 2005 which was delivered in 2007. I have now been informed that the title deeds are ready and I would like to know how much immoveable property tax I will need to pay to the developer.
The title deed transfer fees and calculations are fairly transparent but the immoveable property tax seems to be a contentious and somewhat grey issue. I purchased the property for 145,000 CYP roughly 250,000 Euro, my questions are as follows

What is the 1980 value of a property worth 145,000 CYP in 2005 that didnt exist in 1980 and how is this value assessed, is there a standard calculation used by the land registry or body responsible for this calculation?

How do I know any demand for immoveable property tax from the developer is correct and a true reflection of what has been paid?

What happens if the developer hasn't paid any immoveable property tax for the last 6 years, am I responsible for any late payment fees that may apply?

Regarding any future IPT, will the new tax percentages apply to the 1980 value of the property or the purchase price, and what will happen in 2014 when all properties are re-valued?

Any help and advice would be greatly appreciated.

Regards

MAK

[Nigel Howarth]

Hi MAK and welcome to the forum,

The Land Registry assesses the 1980 value of properties using historical data - and this amount is shown on the Title Deed once it is issued.

The only way you will know if the amount the developer is charging you is reasonable is for him to supply you with tax demands and receipts conforming how much he has paid on your behalf please refer to this letter from the Interior Ministry.

Unless the property is registered in your name (i.e. you are shown on the Title Deed as its owner) you are not liable for any fees that the developer has had to pay the Inland Revenue for late payment.

The Cyprus Property Action Group took legal advice on this some time ago - it's article may help - see Immovable property tax & fraudulent practices.

There is also a shorter article on my other website - Cyprus Immovable Property Tax law.

A proposed bill to raise property taxes (see Revised property tax bill announced) will be voted on by a special session of parliament next Tuesday. The revised bill uses assessed 1980 values as in the past.

What will happen in 2014 is anyone's guess. But I envisage that all properties will have to be revalued, either by applying the consumer price index (which will be quick) or revaluing them using some other more accurate set of parameters. Then the bands will need to be recalculated to raise the money required by government.

(The problem of using the consumer price index is that properties in some areas have increased in value more than the CPI has increased since 1980).

Regards,

[mak1]

Hi Nigel,

Thank you for the response and the links which I found very informative, hopefully my developer will be one of the honest ones on the island.
With regards to future immoveable property tax and valuations lets hope common sense and not greed prevails. If the proposed rates of IPT are applied to current values of property Cyprus will become the most expensive country in the world to own a property and ultimately live.

Regards

MAK